Inside Asian Gaming

8 Near term, we expect Venetian will lift gaming revenues, as did Sands and Wynn. Longer term, we see Venetian as the begin- ning of Macau’s evolution from a pure gam- bling town into a convention and holiday destination.We are less concerned about Ve- netian as competition, as we believe such a high-quality product will expand the market for all operators. We see a critical mass of entertainment, convention and hotel facilities developing in Macau, spearheaded by the Venetian launch. This should create additional traffic for the mass market and lengthen visitor stay to benefit all gaming operators. At present Macau generates around 98% Source: Las Vegas Sands Company Data Source: Deutsche Bank; Las Vegas Convention Center Las Vegas casino-hotel resort revenue trends Source: Deutsche Bank; Las Vegas Convention Center Convention space: Macau vs. Hong Kong Convention pipeline at Venetian Macau of total revenues from gaming, with a mere 2% coming from non gaming. Over the me- dium term, we expect Macau’s business mix to shift to follow the Las Vegas growth path with its stock of large scale resorts that are expected to come online during the next few years. From 1990 to 2000, the development of destination resort-casinos in Las Vegas had allowed non-gaming revenues to grow at a faster rate (13% CAGR) than gaming revenue (7% CAGR). We expect these trends to be re- peated in Macau as the new casino develop- ments are much more comprehensive, aim- ing to turn Macau from a gambling Mecca into a holiday destination. We believe that growth potential in non-gaming revenues is considerable, as these activities now account for almost 58% of all casino-hotel revenues in Las Vegas. While it may take a long time for Macau to see non-gaming revenue reach any signifi- cant proportion, we think the emergence of non-gaming revenue will be an important trend in the development of the city into a real destination resort. Key sector risks in- clude a slowdown in the Chinese economy, its money supply, disruptions to travel, and regional competition from other potential MICE markets such as Singapore. Conventions The Venetian boasts 1.2m sq. ft of con-